Africa’s “Big Five” – Nigeria, Libya, Algeria, Egypt and Angola – currently account for 85% of the continent’s oil and production. But (once again) oil companies are pushing east to explore new production sites. Will they succeed where their predecessors have failed?
Within Africa’s 54 sovereign states lies 8% of the world’s estimated oil reserves. But, challenges including a lack of infrastructure and geopolitical tensions have prevented oil production in many countries.
However, according to Keith Hill, CEO of Canada-based Africa Oil Corp, new 3D seismic data has strengthened the case for developing production capabilities east of the Big 5. As a result, his company has been able to secure key strategic partners and they are now exploring new fields on Africa’s east coast.
But, as with past projects, this company has already encountered infrastructure challenges. In order to justify a large pipeline construction project, production levels will need to be higher than they currently are. But, according to Hill, companies just aren’t there… yet.
Africa Oil’s CEO says that, presently, their “wells are all on-shore… we are focused on oil, not gas; a lot of east Africa’s offshore stuff is primarily gas.”1 His company is using smaller, portable rigs onshore to target well depths of 1,000-2,000 meters in eastern regions of Africa including Kenya and Ethiopia.
They current operate several producing well sites and are optimizing their management the region’s waxy crude oil. This oil has the advantage of low density (so called “light” crude). But, due to its waxy composition, it must be kept warm to prevent solidification during transport.
It is expected that this vast majority of east Africa’s crude oil will be exported due to low demand and its lack of local refining capacity. There are some proposals, most notably in Kenya, aimed at speeding up their development of ports, pipelines, and even local refining capacity. Progress has been slow.
But, regardless of the challenges facing companies who wish to tap into east Africa’s oil resources, the potential seems to be too tempting to ignore.
H/T to GKL2 for the content suggestion. H/T to SB for the title refining.